3. Establishing the terms and conditions of employment
3.1 Industrial awards
An industrial award is a legally binding document that outlines the wages and conditions of employment for groups of employees in an industry or occupation, for example, the Western Australian Hairdressers Award 1989. Generally, employers cannot provide conditions of employment that would be less favourable than award conditions. They may provide conditions that are more favourable that the award conditions or enter into arrangements with employees in relation to matters that are not dealt with by the award.
Western Australian awards are made by the Western Australian Industrial Relations Commission. Traditionally, Commonwealth awards were made by the Australian Industrial Relations Commission.
State awards covering employers that are not constitutional corporations continue to apply in the State industrial relations system. Western Australian awards can only apply to employers that are in the State industrial relations system (that is, employers that are not constitutional corporations).
As indicated above, Labour Relations will be able to assist incorporated associations that are not constitutional corporations to determine whether they are required to apply a State award in their particular circumstances. Incorporated associations that are constitutional corporations can seek advice about award coverage from the Fair Work Infoline on 13 13 94.
An employment contract based on an award might simply be a letter which acknowledges that the position is subject to the provisions of a particular award.
3.2 Employer-employee agreements
If your association is not a constitutional corporation, it may be eligible to make use of a form of individual agreement known as an ‘Employer-Employee Agreement’ (EEA).
An EEA is a voluntary written agreement between an employer and employee, which generally replaces the provisions of an award and forms the basis of the contract between the two parties. (Note that an EEA cannot be made while an industrial agreement, i.e. a collective agreement, applies to an employee's employment).
An EEA cannot be offered as a condition of employment. In offering EEAs, the employer must give a new employee the choice of an EEA or the applicable award, or, if there is no applicable award, a ‘common law’ contract of employment containing the same terms as an EEA. The maximum term of an EEA is three years.
EEAs must be registered by the Registrar of the Western Australian Industrial Relations Commission within 21 days of signing, and must pass a no-disadvantage test to ensure that employees are not worse off than they would be under a relevant award.
There are also a number of other substantive and procedural requirements that must be met before an EEA can be registered.
3.3 Common law contract of employment
Common law contracts are individual agreements between an employer and an employee. Unlike statutory agreements, it is not possible to negotiate out of any applicable award or collective agreement provisions or conditions in a common law contract. Whether they are included in the contract or not, the terms of the award or collective agreement still apply.
Common law contracts may therefore be most useful to incorporated associations where there is no award that applies to its employees. However, any contract would still need to comply with the minimum conditions imposed by the applicable State and Commonwealth legislation.
3.4 Should the contract be in writing?
As noted earlier, it is not essential that a contract of employment be in writing, but it is certainly desirable. It is good practice to confirm any offer of employment in writing, and for the employee to accept the offer by returning a signed copy of the letter, accepting its conditions, before starting work. A letter of employment could cover:
details of the duties required by the position;
whether the position is full-time or part-time, casual or permanent;
the award or agreement (if any) applying to the position; and
any special or additional conditions that apply in the association’s workplace.